CREATING A PERFORMANCE CULTURE

Creating a performance culture requires a systematic approach to managing the performance of organizations, teams and individuals. While leadership and discipline are the defining elements of that approach, they are not the only elements. These authors outline a road map for changing organizational behaviour and, ultimately, for implementing, promoting and sustaining a high-performance culture.

Culture is the learned assumptions on which people base their daily behaviour, “…the way we do things around here.” Culture drives the organization, its actions and results. It guides how employees think, act and feel. It is the “operating system” of the company, the organizational DNA.

But how many organizations develop a brilliant strategy and then fail to execute? How many embark on a major change that does not get successfully implemented or takes too long? How many leaders sit at the executive table where good decisions were made, agreement achieved, commitments made, then only to watch, perplexed, as little or nothing happens? How often do we see creative ideas and innovative plans become stymied by bureaucratic process and energy-draining efforts? In most cases the cause is the absence of a performance culture.

This article highlights the importance of creating a performance culture and continuously strengthening it to achieve desired results. In the first half of the article, we define a performance culture, describe its key elements, and capture what it looks and feels like. We talk about client experiences in creating such a culture and provide a few leadership lessons from a highly successful – and unusual — behaviour change in a Virginia classroom. The second half of the article discusses managing organizational and individual performance and development in such a culture. Here, leaders will gain insights about building this critical business process and reducing some of the pain associated with one that is fundamental to business success.

Building blocks of a performance culture

A performance culture is based on discipline. This discipline promotes decisiveness and standards of excellence and ensures direct accountability. Such discipline is a main reason why commitments and expectations are always clear. On the other hand, a lack of resolve and sanctions in a culture usually characterizes a culture in which there is little or no accountability. In a performance culture, proactive performance management blocks obstructive behaviours and supports, reinforces and rewards constructive ones. In such a culture, people are truly engaged in the business of the organization.

The emphasis on discipline may sound imposing and formal, and even seen as a relic of the “command and control” days of leadership. In reality, it is not. Rather, this discipline recognizes that clear boundaries, combined with flexibility within, are truly liberating.

In order to make this disciplined performance culture work, organizations must have the following:

Openness and trust: Candor is encouraged and there is a willingness to speak the unspeakable. An environment of trust reduces defensiveness when issues are raised. People react more honestly, ask questions more frequently, and are more spontaneous with their comments and ideas. The organization derives greater value from its talent, and employees get to develop their competence and contribute to success.

Managed differences: Conflicts are addressed and unfulfilled commitments are exposed, the better to learn from and correct. Alternatives and options are looked at without a predetermined outcome. People express real opinions and move beyond the perceived “safe talk.” Issues are resolved more effectively.

Simplicity and focus: There is a razor-sharp focus on implementation, with clarity and precision defining what needs to be accomplished and how. There is a commitment at all levels to remove – not add — complexity from the way of doing business. Being results driven and having fun are not seen as mutually exclusive, but dependent on one another. Changes occur, as do positive results.

Playing to people’s strengths: Leaders know their people and effectively match talent and task. They understand their people’s strengths and how best to elicit them. They and their people focus less on closing gaps and more on learning and building on strengths.

The role of leadership in high-performance organizations

Jack Welch’s focus on speed, simplicity and self-confidence stayed with him throughout his tenure as CEO of General Electric. This message was reinforced throughout the organization in leadership expectations, performance management, the Work-Out program, and leadership development programs at Crotonville, Connecticut. Welch was convinced that to realize his vision and be number one or number two globally, you must “combine financial strength, market position and technology leadership with an organizational focus on speed, agility and simplicity.” (Jack Welch, Harvard Business Review, September/October, 1989).

Leadership in high-performance cultures does not reside only at the top of the organization. It must emerge from, and cascade down to, those in customer-facing roles. Leadership must be combined with strategy; it must be ongoing, consistent and grounded in on-the-job learning. It must be supported by formal learning and leadership initiatives. A relevant example is the design and facilitation of a comprehensive leadership development initiative for one of North America’s top advanced centres for organizational learning and culture change. The content of this program was based on the identified leadership roles in customer focus, strategic thinking, local market planning, and the implementation of the Retail and Wealth Management strategies. Planning, working and learning were integrated. The results included improved business growth, leadership alignment, enhanced leadership and wealth management strategies, and a cultural shift to an environment of accountability and commitment. Many organizations have since introduced learning and leadership institutes.

A differentiating factor in the success above was the centre’s focus on implementation; it was seen as a key business discipline and a core element of the corporate culture. Operational decisions were linked directly to the strategic intent. Individual and organizational capabilities were continually assessed for fit. Leaders ensured accountability with consistent, defined levels of performance expectations. Implementation is often approached as something that is delegated down because it is too detailed for senior business leaders. In this organization, it was the leaders’ most important job. Implementation was a systematic, rigorous process that engaged employees in the task of making the business a success.

Therefore, implementation is everything. For example, when Michael Dell was asked by Fortune Magazine to reveal the source of his competitive advantage, he said: “Our direct business model.” He was immediately challenged by the writer, who noted that his business model was not new and had been around for years. Dell simply responded by saying that, “The difference is that we actually EXECUTE it.” (Fortune, June 1999).

A highly disciplined organization that has clear accountabilities and demands results may create the impression that it is stifled by hierarchy and rules. In fact, such demands have the opposite effect. As noted before, when you have clearly articulated strategic intent and core values, along with disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action and strong leadership capability, you don’t need excessive controls.

Leaders in performance cultures are clear about what they lead: strategy and change, self, their people and teams, their organization and their results. They are also clear on how they lead: with authenticity and vulnerability, with discipline and tough empathy, with intuitive thinking and decision making, and by playing to people’s strengths and respective differences. (Goffee & Jones, Harvard Business Review, Sept.-Oct., 2000)

The impact of this disciplined, performance-focused approach was demonstrated in a financial services organization where a sales force restructuring was undertaken to better meet client needs and the company’s financial goals. Alignment amongst senior executives was achieved regarding the overall strategy and newly developed customer segmentation strategies. Role clarity was established across functions that supported the front line. Priorities were clearly communicated around financial strength, market position and technology leadership. Simplicity, speed and agility became the operative words regarding business processes and organizational design. Results included mobilization of the newly integrated workforce and dramatically increased financial returns: Change in funds managed doubled in twelve months, net customer growth doubled and the productivity ratio increased significantly.

Certain factors were critical to success. The CEO worked hard to create openness and trust. He engendered respect for, and managed, differences through productive conversations. He educated management and front line staff on business realities and engaged them in the changes. He clearly articulated what must be accomplished and the resulting value for customers and the business. He communicated constantly to all about expectations and results and recognized successes.

Performance leadership demands that you exercise self-restraint and enable your employees to learn and take intelligent risks so they contribute at their full potential. This means you spend more time listening and asking than speaking and telling. This approach will yield insights, which fuel curiosity, which in turn cultivates knowledge and wisdom.

We can often learn about succeeding and mentoring others in this complex, fast-paced world by looking to the past. In Socrates’ time, it was believed that, because slaves did not have the privilege of an education, they could not be taught anything new. Socrates challenged this belief by wagering that he could teach a common slave the Pythagorean theorem. He taught this solely by asking the right questions and listening carefully to the meaning behind the answers. Socrates understood the power of questions and listening.

Socrates would have approved of the listening and questioning demonstrated in our story (see sidebar) about the successful behavioural changes elicited by Dr. Sharon Reid, a grade 3 teacher in a Washington, D.C. public school. We believe that organizational leaders in public and private sectors might glean valuable lessons about eliciting desired behaviours, listening intuitively and building the confidence required to develop and unleash talent.

Dr. Reid’s students, despite many socio-economic challenges and the fact that they were learning in a locked-down school during several weeks of a sniper scare, demonstrated impressive results through targeted learning approaches: reading (guided skill building), interpersonal communication (listening, questioning, coaching), team skills (integrated, multidisciplinary learning, simulations), and creative thinking and problem solving (art and theatre projects). Their achievements were recognized and made even stronger through participation in a collaborative project with the Kennedy Centre for the Performing Arts. Learning through the arts became a strategy to achieve desired learning outcomes as measured on rigorous, standards-based tests. This school of minority children surpassed the standards for success in the very first year of the No Child Left Behind mandate and was recognized nationally. Dr. Reid is demonstrating her belief that learning and performance are enhanced through artistic, entrepreneurial and playful endeavors.

We have defined a performance culture as we see it and spoken about its key elements. We have also talked of leading in a performance culture and drawn on client business successes. Below, we will explore specifics of managing organizational and individual performance and development in such a culture.

Creating a performance culture

At the crux of business success is the performance of individuals, teams and the total organization. The ability to bring about desired behaviour change drives any attempt to create a performance culture, and below, we describe a core process for effecting such change.

The tools we use in organizations – performance management, performance planning and development, performance appraisals – are all theoretically good. But in reality, they focus too much on the report card. They lack clear expectations, involve insufficient feedback and coaching, focus too much on weaknesses and gaps, provide little time for learning, and drown everyone in documenting things, often at year end.

What’s to be done about something that is so important and basic to success, yet is generally done so poorly and detested by those on the giving and receiving ends? We have three suggestions:

Get rid of traditional performance appraisals “as we know them.” They drain energy and time and fail to produce results. Instead of a year-end exercise, make the appraisal an integral part of the performance and development system.

Complete the total process by expectation setting, ongoing feedback and coaching, and progress and achievement tracking all rolled up into a yearly snapshot, recognition and rewards, and professional development planning.

Deal with performance management holistically: connect the “what’s” and the “how’s”, the strategic and the operational, at the organizational, team and individual levels.

And most importantly…focus on the strengths of each individual…”discover what is unique about each person and then capitalize on it”. (Marcus Buckingham, “What Great Managers Do”, Harvard Business Review, March ’05)

Getting rid of performance appraisals (even “as we know them”) seems somewhat heretical. It is not, if we compare our own experiences with the things we would like to see. These include ongoing feedback on observable and/or measurable performance outcomes; a focus on strengths and the future; employees engaged with their goal-setting and self-appraisals; and the middle 60% feeling they are contributing in meaningful ways vs. being “average.”

Organizations as varied as financial services companies, government ministries and hospitals are increasingly paying attention to the effectiveness of their performance management and development systems to drive accountability for results. A profound culture change is often involved. This requires coaching and implementation support as people become accustomed to a different way of managing, working and communicating.

One financial services company offered multiple challenges and opportunities — a merger, a competitive imperative to strengthen the existing sales and service culture, and compelling survey input about gaps in management and staff communication. The results, after a phased implementation, included faster-than-anticipated cultural integration (as assessed internally and externally), positive survey feedback reflecting improved manager-employee communication, and support for the implementation of a successful customer intimacy strategy. The performance management process provided a foundation tool for a multi-level leadership development initiative.

Evaluation of the ROI impact of the performance management system alone (an attempt referred to by some as a “mug’s game”) was difficult, given the number of ongoing initiatives. Executive stakeholder feedback, corporate survey input, and bottom-line performance pointed to the value of focusing and aligning individual, unit and corporate goals, rigorously measuring and reporting of results, and strengthening management-staff relationships.

To summarize, in high performance cultures, effective leaders clearly articulate a strategic framework of mission, vision and values, strategic goals, and the “critical few” measurable priorities. They design and take accountability for managing service-oriented, efficient business processes and structures. Leaders engage their people and work hard to learn their strengths and preferences. They manage their talent well and encourage ongoing learning. They communicate rigorously and often.

The success of a large provincial regulatory agency in its shift to self-funded agency status and to a truly “professional regulatory organization” provides a good example. In an effort to strengthen its regulatory effectiveness and external credibility, the agency had recently acquired new executive leadership. It was working on parallel tracks of clarifying its strategic intent and improving internal effectiveness and efficiency. The senior team created a new strategic framework outlining where they wanted to head, how they wanted to operate and what they wanted as their top priorities. They searched in several jurisdictions and sectors for a range of best practices to inform their change journey. They reshaped their organization at the top and repositioned their corporate services groups to better serve the business by engaging intact and cross-functional teams in the change work. Team members became resources for one another. Efforts to strengthen leadership and professional service capabilities were integrated into the change work. They devoted particular energy to improving communication effectiveness, knowledge management through technology, and collaborative team processes.

The results were impressive. They included an improved strategic focus, leadership alignment and strengthened regulation as evidenced in visibly-reported cases. Stakeholder/client feedback and external evaluations spoke to enhanced service orientation, increased resourcing for strategic priorities like enforcement, and strengthened leadership and influence across other provincial regulators.

In this example, tightly matching talent to task was a critical success factor, as was searching for best practices within and outside the sector. Leaders worked hard to identify their people’s strengths and preferences for learning and working. In highly effective performance cultures, people understand the importance of business analysis that is based on a rigorous examination of their exemplary performers. A search for innovative best practices is constant and these practices become the roadmap for others. Best practices are not a list of competencies; rather they are specific activities that deliver results. They are in the “language of the line,” not of Head Office or HR. The practices are articulated in a manner that creates immediate relevance and understanding.

In looking at the evolving performance cultures in the above organizations, we saw leaders individually, whether in formal roles or informally, doing several things, more of the time and more effectively:

Taking and managing accountability for their contribution to business success and their own careers. They are good at building consensus, but are decisive when they need to act.

Constantly sensing and assessing the external and internal environments and their customers’, partners’ and employees’ needs and satisfaction levels.

Negotiating clear expectations and goals. They also provide ongoing feedback and coaching, and appraise performance periodically. They invest in talent development, unleash that talent, and plan for succession.

Are reflective and self-aware. They “know” themselves in order to know others. They seek help from others in situations where their natural tendencies won’t serve them well.

Adopting a coaching style of leadership. This strengthens and supports coherence, communication, collaboration and change in their organizations.

Creating supportive, healthy cultures which attract and retain talent. They promote balance and emotional well-being as a way of improving productivity and innovation and leveraging existing talent.

Our research and experience tells us that most people want an opportunity to demonstrate their competence, to contribute and to learn. When given the chance to focus on what they are best at, they will deliver and surprise. They want to work in organizations known for service excellence. They want to be listened to, respected and engaged in change. They want a life outside work. The degrees of need or preference will vary and they play out differently, but they are common to human development. Responding to them strengthens a performance culture.

Human performance is the function of many influences: accountability, feedback, motivation, skills and knowledge, rewards and recognition. These influences are interdependent. It is the combination of these factors that results in the desired performance and the associated leadership behaviours that support the performance culture. Creating a performance culture requires a systemic approach to managing the performance of organizations, teams and individuals. The benefits accrue to both individuals and the enterprise.